Recently, a group of 15-year-old students from a girls’ secondary school in the Palestinian Authority audited the construction of a swimming pool in their town. Part of a competition organised by Integrity Action, a civil society organisation, the girls chose to do this because the local government had decided to build a male-only pool and they felt it was not meant for the whole community.

The girls visited the site and requested and examined all the papers related to the project, including the bills and the blueprints. They found that the lifeguard was unqualified and that the tiles were not of the quality specified in the contract. So they made a fuss.

The builder replaced the tiles. The town hired a real lifeguard and said it would think about adding screens for privacy and opening the pool for women on certain days.

“Working on this project was one of the most successful things we did in our lives. We were finally able to raise our voices and make them heard by decision-makers. We forced them to fix the problems!” said the students.

Fredrik Galtung, the founder and president of Integrity Action, told this story at “The Kids are Alright: Educating for Public Integrity”, a session at the OECD’s Global Anti-Corruption and Integrity Forum at the end of March.

Other sessions ranged from meetings of auditors on infrastructure, norms and standards to topics like corruption in sports, business ethics, human slavery and the law of the sea.

“Planet Integrity is not a distant dream, it’s an urgent necessity,” OECD Secretary-General Angel Gurría said in his opening remarks.

The cross-border reach of corruption and the problems it poses to national agencies was echoed repeatedly at the forum. “Slavery and human trafficking have no borders,” said Monique Villa, CEO of the Thomson Reuters Foundation and founder of TrustLaw and Trust Women.

In the session on sport, Ronan O’Laoire, Crime Prevention and Criminal Justice Officer, talked about the “perfect circle” of betting, money laundering and match fixing, with criminals in one country using the globalised betting markets to profit from sports events in other continents.

The cross-border problem is exacerbated by the speed with which the corrupt hop to new honeypots and how fast they adapt to technological and social changes, such as the dark web, e-trade and cryptocurrencies.

“Corruption is a moving target,” Mr Gurría said. “Corruption is often a faceless and borderless crime. Illicit financial flows, cybercrimes and human trafficking are the ‘dark’ side of globalisation. Tackling this must be a global priority.”

John Penrose, a British MP who has been appointed his country’s “anti-corruption champion” was worried: “We are slower than the corrupters at the moment. They are way ahead of us.”

Marcos Bonturi, who heads the OECD’s Directorate for Public Governance, said that people are our best weapon against corruption. “We have been too focused on legal implementation but we’re no longer ignoring the human dimension–how individuals see themselves and relate to society and how education can create a culture of integrity.”

He added, “But we cannot do that overnight. It takes a generation or two. We need to start now.”

That high-school students investigated the accounts of a community swimming pool and found information that led to changes is the kind of grass-roots activism that will beat corruption. But it’s an active vigilance that has to be taught, and taught while people are still young. Mr Galtung summed it up neatly: “Corruption is a skill set. Integrity is a skill set.”

NOTE: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Corporations in general, and multinationals in particular, wield substantial financial and socio-economic power. They can and do commit different types of offences through the individuals that work for them. Faced with this reality, the use of corporate criminal liability (CCL) has increased over time. However, CCL raises many theoretical and practical questions. To what extent can corporations be held criminally liable for offences requiring a mens rea element? How should criminal proceedings be conducted against corporations? Who will represent the corporation throughout an investigation or trial? To what extent do corporations benefit from procedural safeguards that were historically conceived for individuals?

These questions have been answered differently around the world. Some systems base CCL on a model of vicarious liability, whereas others favour an anthropomorphic model. Procedural questions, such as those above, on how corporations should be tried and how fair trial rights should apply to corporations, are often overlooked.

Whereas the applicability of some fair trial rights to corporations may be easily accepted, other rights such as the right to silence and the privilege against self-incrimination, are less obvious when corporations are suspected of a criminal offence. These rights were traditionally developed to protect individuals against physical or psychological compulsion. If they are to be applied in the corporate context, several questions arise, such as: which of the corporation’s employees can invoke these rights? All employees? Only middle or top management? Only the corporation’s legal representatives? What would be the impact if corporations could rely on the privilege against self-incrimination and refuse to hand over self-incriminating documents?

The (un)availability of the privilege against self-incrimination and the right to silence can substantially impact defence strategies available to corporations. If they cannot rely on these rights when confronted with a demand for incriminating evidence by prosecuting authorities, the choices available to corporations are limited. Corporations can have good reasons for deciding to cooperate with prosecuting authorities in an effort to obtain the most favourable outcome, for example because they want to avoid the stigma that can come with criminal conviction. Then, they are likely to cooperate, for example by handing over evidence of any wrongdoing. Conversely, a corporation may decide that it does not want to cooperate with the prosecuting authorities. In such cases, the right to silence and the privilege against self-incrimination are particularly relevant.

The question about whether a corporation can rely on the privilege against self-incrimination and the right to silence has been answered differently in different jurisdictions. The variety of approaches can be particularly challenging in the context of cross-border corporate wrongdoing, such as bribery of foreign public officials.

The US approach is very clear: corporations, like other collective entities, cannot benefit from self-incrimination clause of the Fifth Amendment. This Supreme Court doctrine can be traced back to Hale v Henkel handed down at the beginning of the 20th century and the cases that further developed the doctrine. The exclusion of corporations from the scope of these rights was based on several arguments, some of which have lost their appeal over time. The Supreme Court considered that, as the privilege against self-incrimination is a purely personal privilege, it cannot be exercised by corporate employees or agents on the corporation’s behalf as it feared the detrimental impact on the prosecution of cases in a business context. Nevertheless, the US Supreme Court has accepted that corporations can benefit from several other fundamental rights.

The Belgian Court of Cassation’s approach is at the other end of the spectrum. It was confronted with a case in which a financial institution had been required to produce self-incriminating evidence and failure to do so could result in a fine. The Court of Appeal had excluded evidence that was produced under that threat as it considered that the right to silence had been infringed. Its judgment was confirmed by the Court of Cassation on 19 June 2013 (Case P.12.1150.F).

The European Court of Human Rights, which has handed down several cases dealing with the right to silence and the privilege against self-incrimination in the context of natural persons, gives no detailed answer to the aforementioned question.

The Court of Justice of the European Union (CJEU) has ruled on the right to silence and the privilege against self-incrimination of undertakings in the context of competition law. It should be stressed that EU competition law is not considered to be criminal in nature by the CJEU. Thus, it may be that the CJEU would be more generous when corporations face classic criminal sanctions instead of punitive administrative sanctions. The Court’s position can be summarized as follows: undertakings cannot refuse to hand over incriminating documents when the European Commission issues a Decision based on Council Regulation (EC) 1/2003, nor can they refuse to answer its questions, except where answering a question would entail an admission of an infringement of competition law.

The recently adopted EU Directive 2016/343, which includes a provision on the right to silence and the privilege against self-incrimination, excludes legal persons from its scope. The Preamble to the Directive makes it clear that legal persons can nevertheless rely on existing legislative safeguards and case law.

In conclusion, several uncertainties have been highlighted. Whether and how procedural safeguards are to be applied when a corporation is being prosecuted, is a complex question, which has been answered differently by various countries. The wide variety of approaches taken in Europe and elsewhere highlight some of the challenges in the field.

The OECD Working Group on Bribery (WGB) is correctly interested in examining more closely the question of legal liability of organizations, including corporations. The broad question raised is what makes for an effective system for the liability of legal persons and as the WGB recognizes, there are many choices that follow if corporate criminal liability is adopted. Corporate criminal liability has evolved enormously in the United States, not in the legal standard, but in the details of its implementation, and many lessons can be learned from that experience.

Costs and Benefits of Corporate Criminal Liability

One advantage of entity legal liability for foreign bribery, and a range of crimes, is that often employees and agents are not facilitating the payment of bribers purely or even chiefly for their own benefit, but rather for the benefit of a corporation. The bribe money may come from the corporation, with the intent of securing business for the corporation, and the employees may at best want to be rewarded in their careers at the corporation. The corporation may create the environment that encourages employees, officers, and agents to pay bribes to secure business. The corporation itself must be deterred from promoting bribery. The corporation may also be in the best position to adopt measures to prevent bribery in the future. Employees may be fired or prosecuted, but their replacements will continue the same practices if the corporation does not change its own policies and culture.

For those reasons, punishing only individuals may not affect the incentives and the culture that the corporation created. That said, corporations need not be punished criminally if civil alternative suffice to deter bribery. Whether civil fines and civil injunctions are adequate to do so, may depend on what penalties are available to civil enforcers and whether they have the investigative resources to effectively uncover and penalize bribery schemes. In many countries, civil regulators cannot impose punitive fines. If a company, for example, need only disgorge its gains from bribery when it is caught, there is little incentive not to continue paying bribes to secure profitable business. However, if civil regulators can impose punitive fines (for example fines up to twice the gains to the company or the losses to victims – the standard under the criminal Alternative Fines Act in the US) then the outcome may not be much different than if the case was denominated as criminal. The only difference may be the reputational threat of a criminal case, the collateral consequences of a criminal action, and requirements in criminal cases that a company cooperate in any investigations of individuals. Each of those features of criminal enforcement in the US could in theory be made part of a civil enforcement scheme – even cooperation in any pending criminal investigations of individuals. Collateral consequences such as debarment or suspension can also (and often are) be associated with civil enforcement.

The main reasons to denominate penalties and sanctions (such as monitoring or compliance) as criminal would be that civil authorities in a given country might not have the enforcement resources, investigative resources, or penalties and sanctions available to sufficiently deter and punish foreign bribery.

Procedure may enhance or limit the ability to adopt corporate criminal liability in a jurisdiction. For example, if entities have self-incrimination rights, then an entity target will be able to resist providing documents and information about wrongdoing – corporate criminal liability will make it more difficult for enforcers to secure information about what transpired. Or if corporate criminal liability better incentivizes cooperation in investigation of individual offenders, it may enhance accountability in such cases.

Jurisdictional obstacles to bringing bribery cases against employees of a multi-national corporation may not exist for corporations that have an operating presence in a country. As a result, jurisdiction may be another practical reason to have corporate criminal liability (however, civil liability could also be premised on the same concept of jurisdiction).

Form of Corporate Criminal Liability

Some countries adopt modified forms of corporate criminal liability in which prosecutors must prove involvement of high level officials, for example, or that the criminal actions were endorsed or ratified by top-level officers. Such approaches make it far too difficult to impose liability and they lead to complex investigation and litigation of questions regarding knowledge of particular actors within a company. Individual accountability can and should be investigated separately, but to intermingle such questions with the question of corporate liability hinders effective enforcement.

A strict or respondeat superior standard imposes liability on a company for the actions of agents acting with the scope of their employment and at least in part to benefit the corporation. That broad standard, adopted in federal court in the United States, makes it clear that a company cannot avoid liability for actions of employees, or of contractors or subsidiaries acting at least in part in the interests of the corporation. If a jurisdiction is to adopt corporate criminal liability, that liability standard is preferable, in my view. All conduct by agents, including hired intermediaries, contractors, broadly defined, should support liability. Nor are such agents “unrelated” if they are hired by the corporation.

There is no reason to excuse bribery when it is a “low-level” employee that commits it. The problem is not a mere failure to supervise; the low level employee has no reason to engage in bribery except to benefit the corporation. If there is a low-level employee exception to bribery law then corporations can tacitly encourage the most dispensable low-level employees to violate bribery laws.

Nor is there any reason to excuse successors from the criminal actions of the entity they acquired. A sale or merger should not wipe the criminal slate clean. Otherwise, companies would play a shell game, engaging in mergers or sales simply to avoid consequences of their crimes. Companies should be expected to do due diligence regarding criminal exposure before making a purchase, and that potential liability and need to do due diligence will further encourage compliance to detect and prevent bribery.

More nuanced questions concerning whether the corporation should be fully blameworthy can be addressed as a matter of sentencing or through settlement with prosecutors. Whether to credit corporate cooperation and self-reporting or existing compliance efforts, for example, can be considered as a matter of sentencing, or in negotiation of settlement agreements. Keeping such case-specific questions separate from the question of the liability standard, however, has real advantages.

Settlements and Remedies

There is much to discuss regarding how settlements can or should occur and options for guiding and structuring corporate settlements. I have argued that having judicial involvement in the approval and supervision of settlements enhances the legitimacy of the process and permits the public interest to be better considered. Purely out-of-court settlements should be avoided.

Compliance may be important to reforming a corporation going forward, and as a condition of resolving a bribery case. Prospective compliance is more important, in my view, than the question whether to reward retrospective compliance. It is problematic to excuse penalties based on pre-existing compliance – which was by definition ineffective in detecting bribes – and because assessing compliance from the outside is challenging. It is important to carefully assess a company’s compliance, and if it truly did everything it could to prevent bribers, then it should be mitigating factor, but not a shield from liability.

There should also be clear incentives to audit and assess compliance, even if the result uncovers self-critical information. Indeed, there should be incentives to share best practices across industry. Enforcers and prosecutors should make the rewards for sharing best practices clear and they should promote sharing of best practices.

More important will be imposition of deterrent fines – and on the detection side of the equation, rewarding self-reporting by companies, since it can be very difficult for enforcers to know whether bribes were paid. Enforcers should also reward whistleblowers who report bribery.

General Corporate Criminal Liability

Having a general standard for corporate criminal liability has the advantage that bribery crimes may be accompanied by other corporate crimes, like money laundering, fraud, or antitrust violations, to name just a few examples. Adopting anti-corruption crimes but not having mechanisms to address accompanying criminal conduct can weaken enforcement. That said, as with any crime, it is far better for bribery crimes to be detailed in statutes to provide clear notice as to what conduct is prohibited.

Finally, I note that as more countries adopt corporate criminal liability for bribery and other crimes, it will be important to develop coordination rules, including double jeopardy norms, so that corporations do not face multiple overlapping punishments for the same conduct.

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Rolf Alter @raltergov Director, Public Governance and Territorial Development Directorate

It’s hard to imagine government doing its job well without a commitment to basic levels of integrity. Imagine if every administrative process required a bribe to this official or that to accomplish it. Or imagine seeing your tax money wasted on lavish buildings or useless infrastructure because of collusion between public officials and private investors.

And what about the effects you can’t see but end up paying for: the very useful bridge that cost 50% more than it should have due to bribes, skimming and inefficiencies (not to mention potential quality issues); or a screwdriver with a 300% mark-up and other overpriced items buried in a defence contractor’s invoice? These are all examples of waste and abuse of hard-earned citizens’ wages made possible by breaches of integrity. Beyond monetary costs, there is also a steep price to be paid in lost trust and cohesion, both essential to reducing transaction costs and making our societies function.

Without a culture of integrity, democratic processes themselves become endangered. In every society there are individuals, families, organisations and even institutions that try to distort political processes and circumvent commercial rules and regulations. The role of a culture of integrity is, in part, to ensure the integrity of our democratic processes. It means having the controls in place to prevent narrow interests from “gaming” the essential fairness of political and business processes.

The OECD takes a holistic approach that considers all of the risk areas in which corruption takes place, as well as all of the actors, activities and transactions that need to be protected­. Through our evidence-based approach, we are able to provide policy support that gives countries tools to help in the fight against corruption. In this role, the OECD partners with the G20, studying the relationship between corruption and economic growth, elaborating whistle blower protection frameworks, public sector integrity frameworks and more.

The risk of corruption is strongest in the case of government-led projects on infrastructure. In 2013, OECD countries spent close to $1.35 trillion in public investment, representing 3.1% of OECD GDP and 15.6% of total investment (public and private). The cost of corruption and mismanagement has been estimated to contribute to 10-30% of large infrastructure budgets. Indeed, the majority of cases brought under the OECD Anti-bribery Convention concern public procurement. The OECD Integrity Framework for Public Investment is a new tool (forthcoming) that can help governments to identify vulnerabilities and the potential points of entry of corruption in infrastructure projects.

There are concrete steps that can be taken in achieving a culture of integrity—and the OECD’s Directorate for Public Governance & Territorial Development (GOV) is accompanying many countries in this process. It requires coherent efforts to update standards and to provide guidance to public and private stakeholders. It also requires countries to anticipate risks and apply tailored countermeasures. These are all areas where governance and good policy make the difference by helping to bring about systemic change, rather than after-the-fact measures that risk overreaction and the undermining of credibility.

But good policies need to have teeth, in other words, monitoring and enforcement. A country may have campaign spending rules and even an oversight committee in place, but little or no enforcement. Underfunding enforcement is one of the ways that policies can be undermined by special interests. Policies must impose clear rules and meaningful penalties to ensure fair and democratic processes.

To achieve this, GOV works with countries to adopt a whole-of-society approach. That means all stakeholders, public, private and civil society, must work together to make it happen. If that sounds ambitious, it is. Fortunately, the OECD has processes that are helping countries take important strides in ensuring basic fairness in their political processes and public investment practices.

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When you start to play football (or soccer, or whatever it’s called in your country) at a competitive level with real goalposts, referees and crowd trouble, one of the first things you learn is what to do when you commit a foul that elsewhere would get you arrested for causing grievous bodily harm (or aggravated assault, or whatever it’s called in your country). Don’t mutter “Sorry, old chap” and head shamefaced for an early bath. No, clamp your elbows to your sides, turn the palms of your hands upwards, hunch your shoulders, and stare incredulously at the approaching red card with a look of outraged innocence. That’s what was going on behind those bed sheets as FIFA’s finest were being led to their new team bus by the Swiss police.

The officials are charged with pocketing over 100 million euros thanks to illegal deals for various bits of footballing business. What may be surprising to people who aren’t interested in money football is that what surprises fans is the fact that the FIFA bosses were arrested, not that they may be corrupt. Even here at the OECD where a search on our website for “sports” brings up a discussion of the Australian Trade Practices Act or restrictions on franchise relocation in the US, questionable practices concerning the rights to broadcast football (one of the deals in question) appear regularly in country submissions regarding competition policy, such as this one in 2013 from Poland to the Global Forum on Competition.

Sepp Blatter, FIFA president, says he’s glad his friends got caught: “we welcome the actions and the investigations by the US and Swiss authorities”. And at tomorrow’s meeting of the Association, there will no doubt be calls to strengthen the fight against corruption. It’s a problem any authority handling large sums of money has to deal with. An OECD Policy Brief on fighting bribery cites World Bank estimates that more than $1 trillion dollars are squandered every year on bribes paid to public officials in exchange for advantages in international business.

When Sepp won his first presidential election in 1998, you could actually deduct bribes from your taxes as a legitimate business expense in some OECD countries. All that changed in 1999 when the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions came into force. FIFA itself is a private business of course, but it deals closely with governments when awarding the right to stage its major tournaments, especially the World Cup. One if its conditions is the right to BEPS – it doesn’t have to pay tax on its earnings in the host nation.

Even so, countries, cities or regions hope to benefit from the World Cup, Olympics and other big shows to promote economic growth by focusing efforts to provide and improve infrastructure, make the locality known to potential investors, and so on – “legacy” as they call it.

But as another OECD report on the benefits of staging global events warns, “Too many events have left places worse off, with expensive facilities that have no use, and a big bill to pay into the future”. That seems to be the case in Cuiaba, Brazil that has so far spent a billion reais ($350 million) of public money on a light rail system for last year’s World Cup that so far only has one station and will take at least another $100 million to finish. According to BloombergBusiness “Cuiaba’s rail system is the most visible failure of projects linked to the 2014 World Cup. The city has failed to complete 22 other promised legacy works including a hospital and several transport infrastructure programs.”

Oxford University’s Said Business School isn’t a fan of the 2010 World Cup’s legacy in South Africa either: “Instead of the economic growth the stadiums were intended to stimulate, six newly built stadiums all have annual maintenance costs which exceed their revenue, and five out of six require ongoing taxpayer support. […] the legacy of these stadiums is having an undeniably negative effect on South Africa.” But it would be unfair to single out the World Cup when there are claims that the billions Greece spent on the Athens Olympics in 2004 is partly to blame for the current crisis.

In any case, we now have the answer to the question we asked last year when launching the Portuguese version of our Better Life Index in Brazil: Is there more to life than football? The answer is “Yes, prison”.

Useful links

More bad news for FIFA: “Today the BWI (Building and Wood Workers’ International) filed a complaint against FIFA under the OECD Guidelines for Multinational Enterprises for failing to engage in due diligence concerning human rights for migrant construction workers in Qatar. The submission asks the Swiss National Contact Point to use its good offices with FIFA to facilitate change and to facilitate productive discussions between FIFA and BWI.“BWINT web site

The next Global Forum on Responsible Business Conduct (18-19 June here at the OECD) has a highly topical session on “Responsibility in International Sporting Events”. Here’s the programme note:International sporting events involve an intensely competitive bidding process for the host country and large corporate sponsorship amounts. In light of the upcoming Brazil (2016), PyeongChang (2018), Tokyo (2020) Olympics and FIFA World Cups in Russia (2018) and Qatar (2022), this session will be an opportunity to reflect on the role and responsibilities of governments, international bodies and enterprises (such as IOC, FIFA and Formula One) in ensuring that RBC standards are observed throughout the organisation of such events.

Public procurement processes are one of the best examples of how citizens, governments and businesses can work together for mutual gain – or work at cross-purposes or the exclusion of one another for huge loss. It is big business. Around US$9.5 trillion of public money is spent each year by governments procuring goods and services for citizens.

Businesses, governments and citizens all stand to win from smart, efficient investments in infrastructure and public services. Projects that do not strip out mismanagement, fraud and corruption end up costly, wasteful, unsuitable, defective or even deadly as we saw in the collapse of the Rana Plaza complex in Bangladesh in 2013, a tragedy that led to hundreds of deaths of a largely female workforce.

When the products that citizens ultimately pay for are dangerous, inappropriate or costly there will be an inevitable loss of public confidence and trust in governments. Corrupted bidding processes also make a mockery of the level playing field for businesses, especially for younger, innovative companies eager to compete in a fair manner who may not have the backdoor contacts to buy contracts.

It happens far too much. The OECD estimates corruption drains off between 20 and 25 per cent of national procurement budgets. Few government activities create greater temptations or offer more opportunities for corruption than public sector procurement. Indeed, 57 per cent of foreign bribery cases prosecuted under the OECD Anti Bribery Convention involved bribes to obtain public contracts.

So how to ensure clean and efficient investments?

Fundamentally, transparent and accountable procurement cycles mean the companies that win the bids are those with the best product, at the best price targeted at achieving the best outcome. This is not a new concept, but we can no longer afford to talk in the abstract.

Information needs to be proactively disclosed from the earliest decisions to the final audits.

Access to project information is crucial to enable decision-makers to make informed judgements about the cost, quality and socio-economic and environmental impact of the projects concerned. When there is a lack of disclosure of information around government decision-making, it is easier to hide manipulation of decisions. Citizens –those who stand to win or lose the most – need to be part of those decision-making and monitoring processes, not only to act as independent monitors but also to reduce information asymmetries that can lead to trust deficiencies.

However there is a bonus for businesses too. Access to previous contracts allows businesses to make more focused and appropriate bids. More transparency leads to more competition too. Transparency International Slovakia found that transparency reforms in procurement that included contract publication led to an increase in bids from an average of 2.3 per public tender in 2009 to 3.6 in 2013.

In Georgia all information – including amended contracts – is made public. To incentivise good corporate performance and make sure mistakes are not repeated, lists of whitelisted and blacklisted companies are published.

Governments should also collect and disclose the identity and beneficial ownership of all bidders.

Time and time again, Transparency International sees how competitive bids lose out on public contracts because corrupt officials award themselves, family, friends or associates the contract. One way that this can be done is by disguising their identity or that of their family members or associates behind a front or shell company. Governments need to be collecting and at the time of the award, publishing the beneficial ownership information of all bidders.

On the back of a number of procurement scandals in the health sector, Slovakia has committed to adopt a law that would prevent companies who cannot disclose their beneficial ownership from being able to bid for public contracts.

It’s time to make better use of technology and data. E-procurement systems make processes much more efficient and reduce opportunities for corruption by limiting dependence on public officials. South Korea’s e-procurement system KONEPS was found to have saved the public sector US$1.4 billion in costs and the private sector US$6.6 billion compared to the previous paper-based system. The time it took to process the bids dropped from an average of 30 hours to just 2.

All disclosed project information should be made available online in open-data format. This means the information needs to be comparable, freely released and shared, and usable. The Open Contracting Data Standard provides a ready template to make this information accessible and useful. Making better use of open data has benefits for all parties.

With the adoption of concrete specific transparency measures in public procurement as outlined above and in Transparency International’s guide to curbing corruption in public procurement, the private sector benefits from a level playing field, predictable business environments and a reduction in risk. For governments, there is greater efficiency in public spending, better quality of public services and enhanced trust. Citizens meanwhile benefit from better and more appropriate services, and more effective checks and balances.

There is progress on this issue internationally. Through the Open Government Partnership, forty countries now have commitments on making government contracting more open. Several countries including Canada, Colombia, Mexico and Romania are implementing the Open Contracting Global Principles and/or its data standard. As the world looks beyond 2015 and towards new global development and climate goals that must be delivered, ensuring clean and transparent procurement processes, a critical component of how development monies are spent – will be critical for fighting poverty and climate change. Finally, the G20 is developing High Level Procurement Principles for adoption later this year. By incorporating these simple win-win-win components into those Principles, and by encouraging wider adoption of more precise definitions on what we mean by transparency in public procurement, we could generate a real sea-change and start to lower those OECD estimates of corruption in procurement.

Think back to a time when your purse or wallet was stolen, or your laptop with all your files in it lifted from your bag, or any other possession taken from you. What did you feel? Probably outrage, anger and even despair, perhaps with a surprising sense of helplessness. When corruption occurs, intense emotions rarely, if ever, result (unless you count the joys of mounds of illicitly acquired cash or the agony of incarceration). When corruption swindles the public good, the effect isn’t immediate but muted, diluted across the population, producing a signal so feeble few can feel it—directly. And this may be just what the corruptors, the skimmers, the influence peddlers, the brown-envelopers and breeders of white elephants count on.

The Integrity Forum at the OECD – “Curbing Corruption – Investing in Growth” – will expose corruption in its myriad forms, in both the public and private sectors, as part of the OECD CleanGovBiz initiative, supporting governments, business and civil society to build integrity and fight corruption.

In 2013, OECD countries spent close to USD 1.35 trillion in public investment, representing 3.1% of OECD GDP and 15.6% of total investment (public and private). Sub-national governments undertook more than 60% of this investment. Wherever there is money—particularly huge sums of it—the risk of corruption runs high. This is strongest in the case of government-led mega projects on infrastructure. The cost of corruption and mismanagement, already estimated to contribute to 10-30% of large infrastructure budgets, could prove explosive over the years to come. Indicators point to a wide gap between available infrastructure and growing needs. The investment required just to keep up with projected global GDP growth has been evaluated at 57 trillion USD between 2013 and 2030.

Corruption exerts a direct, detrimental effect on public investment while cheating the public out of money and value that is rightfully theirs. Corruption puts the brakes on growth by potentially denying certain multiplier effects while reducing the productivity and long-term returns on public investment. Given today’s context of anaemic public expenditures, investment efficiency couldn’t be more crucial. But corrupt practices also skew budgets away from essential services such as health and education (already diminished) and result in poor quality infrastructure or infrastructure that is a plain waste of public funds—the proverbial white elephants. Knock-on effects such as higher maintenance for shoddy construction, shorter operational lifetimes, higher prices to cover inflated costs and even injury and death add to the disparaging picture.

A report by BMZ, the German Federal Ministry for Economic Cooperation and Development, provides a striking example. In 2009 the City Archive of Cologne collapsed, killing two people and destroying or damaging numerous historical manuscripts. Restoration of the documents that were saved is estimated to cost 350 million euros. The state attorney found that the building collapsed because of corruption during construction work in the subway that ran underneath it. Only every second or third steel frame was embedded after several tons of steel frames were sold to a scrap dealer, and the Kölner Verkehrsbetriebe (public transport authority) found that 80% of the reinforcements were missing.

Corruption can also create general distrust, both on the part of citizens who see their hard-earned wages wasted in corrupt, state-sponsored endeavours, and by creating an environment inhospitable to investment.

For anyone with corrupt intentions, the public investment cycle presents plenty of entry points. From the initial investment decision through to project selection, implementation and post-project maintenance and evaluation, each phase offers unique opportunities for the unethically minded. How these weak points are exploited depends on the profile of the actor(s) involved. The usual suspects: elected and non-elected public officials, lobbyists, civil society organizations, regulators, contractors, engineers, suppliers, auditors and more. If you think this sounds like a who’s who of total project participants, you’re right—which underlines the massive scale of the challenge. What’s more, fewer than half of building professionals are able (or willing?) to evaluate the annual costs of fraud or corruption to their organization according to one report. On the other hand, global construction industry losses due to construction mismanagement, inefficiency and fraud could reach 2.5 trillion USD by 2020.

How much investment will be captured by corruption depends on whether countries, and corporations, will have the necessary safeguards in place. The Checklist to Curb Corruption in Public Investment is a new OECD tool that will assist governments in mitigating corruption risks in public investment. The checklist identifies corruption entry points over the entire investment cycle and provides real life guidance on how to prevent corruption.

For each shadowy form of corruption there seems to exist a corollary in the world of legitimate business. The enviable position of having “connections in high places” is a nuance away from influence peddling; “informed market information” is a close cousin to insider trading; a company’s “aggressive” efforts to court client loyalty might be bribery by any other name; ambitious targets could easily morph into an “ends-justify-the-means” approach to hitting year-end numbers. While those guilty of corruption may be systematic offenders operating in a corrupt environment, they are just as likely to be first-time offenders, men or women who consider themselves to be “as honest as the next person” (where one places that cursor certainly matters). Corruption can start with a minor moral compromise then crescendo into a long-term scheme for ripping off the public, as graft tends to engender follow-on ethical breaches. The enabling psychology providing the tipping point can be personal or interpersonal. It can exist in isolated pockets within an organization, permeate whole divisions or entities, and even exist on a countrywide level. “Business-as-usual” can take on many different meanings within the ethical spectrum.

Ethical compliance is preferable to enforcement and the heavy burden it places on both private and public organizations. But in reality both are needed if trust and its enabling effect on investment are to be established. Also, the risk of non-compliance must be fully assimilated by an organization. Increasingly, non-compliance represents a substantial risk to organizations, quickly sanctioned by markets, shareholders, stakeholders and citizens. Organizations ignore this at their own peril.

The harsh reality may be that human nature isn’t about to change anytime soon. Research has shown that past behaviour, whether an individual’s or a corporation’s, is a poor predictor of future behaviour. In the fight against corruption, perhaps that’s both the good news and the bad news.

Make a difference! Join us at the OECD Integrity Forum, “Curbing Corruption – Investing in Growth” OECD, Paris, 25-26 March 2015.